Brazil Interest Rate

The Central Bank of Brazil raised its Selic rate by 100 bps to 12.25% in its December 2024 meeting, with plans for further tightening if inflation risks persist, particularly given adverse external and internal factors that continue to affect inflation projections and expectations. Officials emphasized that their decision was essential to achieving inflation targets, promoting economic stability, and supporting full employment. Domestically, economic activity and labor market indicators remain robust, with the third-quarter GDP report showing an expanding gap. Inflation, both headline and core measures, continues to exceed target levels, leading to revised inflation expectations for 2024 and 2025, now projected at 4.8% and 4.6%, respectively. The Board also noted that the external environment remains challenging, primarily due to uncertainties surrounding the US economic outlook, which raises concerns about the pace of slowdown, disinflation, and the Federal Reserve's policy stance.